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Will mortgage rates continue to drop this August? Here’s what experts say
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On top of record-high home prices, a high interest rate environment has made it too expensive for many Americans to purchase a home. According to the Federal Reserve, the median sales price in the U.S. is $412,300, roughly 30% higher than in 2020. Meanwhile, 30-year fixed-rate mortgage rates have remained elevated for the past couple of years.
However, the mortgage market has seen positive signs recently, with average mortgage rates hitting a four-month low in July. According to Freddie Mac, average rates on 30-year fixed-rate mortgages have dropped below 7% and currently stand at 6.73%.
If buying a home or refinancing your mortgage is part of your near-term plans, monitoring mortgage rate trends could inform your decision. We asked several mortgage rate experts for their projections on how mortgage rates will trend in August and beyond as the rate climate evolves.
See how low of a mortgage rate you could lock in here now.
Will mortgage rates continue to drop in August?
The experts we spoke to were split on the future of mortgage interest rates this month. Here’s what they predicted:
Mortgage rates could continue to drop in August
All eyes are on the Federal Reserve, watching when the central bank may lower interest rates. Several experts said the anticipated rates are already factored into today’s interest rates. However, other economic factors like inflation and the unemployment rate can also come into play.
Daniel McKeever, an assistant professor at the School of Management at Binghamton University, State University of New York, anticipates a modest rate drop. “My best guess is another slight decrease (in mortgage rates),” he says. “The labor market is softening a bit, and inflation continues to ease.”
McKeever points out that inflation is trending toward the Fed’s stated target rate of 2%, which could prompt the central bank to drop the federal funds rate in September. “Mortgage rates track closely with the Fed funds rate and can sometimes serve as a leading, rather than lagging, indicator if creditors are anticipating a lower rate environment in the near future.”
Learn more about your current mortgage rate options online.
Mortgage rates won’t drop in August
Other experts we spoke with agree that any Federal Reserve rate cuts are accounted for in the current mortgage rate, but project rates to hold steady for August.
“The markets are already expecting the Federal Reserve to reduce the rates in September with a likely reduction of 0.25%,” says Jeremy Schachter, a branch manager at Fairway Independent Mortgage Corporation. “This is already being anticipated, and mortgage rates are already counting on that. So a further reduction in rates for August is not expected.”
Ralph DiBugnara, president of Home Qualified, points out that mortgage rates recently hit four-month lows in July, largely due to widespread speculation about a potential Fed rate cut in September. He states, “Those bets have built most of that anticipated cut into the rates already, so I anticipate August rates staying steady at July’s averages until we get a definitive decision from the Fed Chairman.”
Factors that could influence mortgage rates
Several factors contribute to market mortgage rates that bear close watching if you plan on financing a new home or refinancing your current one. Here are a few of the most common drivers that affect mortgage rates.
- The Federal Reserve: Changes in the Fed rate often lead to adjustments in the prime rate for mortgages. Consequently, mortgage lenders must change the rates accordingly.
- Inflation: When inflation is high, the value of the dollar declines. To compensate for the change, lenders charge higher interest rates on their mortgages. Conversely, lower inflation can lead to reduced mortgage rates.
- Bond market: Mortgage rates are also influenced by mortgage-backed securities, which are collections of mortgages sold on the bond market. When demand for these bonds is high, it often results in lower mortgage rates and vice-versa.
- Overall state of the economy: When unemployment is low, consumer spending is up, and other economic indicators are strong, mortgage rates often rise. The opposite is also true, with a weaker economy leading to lower rates.
Inflation is one of the primary factors contributing to the current mortgage rate environment. The Federal Reserve followed an aggressive rate hike schedule through much of 2022 and 2023 to curb inflation, and mortgage rates followed suit.
“Inflation has been the greatest adversary to lowering interest rates over the last two years,” says DiBugnara. “A drop in the inflation rate, as well as lower consumer spending and higher unemployment, are what’s most likely to have a positive impact on rates being reduced.”
See how far mortgage interest rates have already been reduced here.
The bottom line
Inflation is beginning to cool, but it could take time to reach the Fed’s 2% inflation rate target. While the central bank is projected to lower rates in September, the consensus indicates more meaningful mortgage rate changes may not happen until late 2024 or early 2025. As such, if you find a home that meets your needs, it may not be a good idea to wait for mortgage rates to fall.
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A skydiver was found dead in northwestern Louisiana over the weekend after his parachute failed to deploy, authorities said. He was briefly reported missing in the wake of the jump.
The Caddo Parish Sheriff’s Office identified the skydiver as an Asian male but did not share his name. On Saturday afternoon, the office said a search was underway for a skydiver last seen in the Gilliam area, which is about 25 miles north of Shreveport. The sheriff had received a report just before 1:30 p.m. local time from Gilliam Airport that notified them he was missing.
Deputies learned the skydiver’s parachute did not deploy when they arrived at the airfield, according to the sheriff. Multiple agencies began to search for the man, including an air rescue team and units from the North Caddo Medical Center, Caddo Fire District and the Wildlife and Fisheries Department, along with the Caddo Sheriff’s Office.
The missing skydiver was found dead about two hours later, the sheriff said, noting that searchers discovered his body a couple of miles from his intended landing spot. Authorities are investigating the incident.
Skydiving accidents are rare. The United States Parachute Association reported 10 fatalities during skydives in 2023, out of 3.65 million jumps recorded throughout the year. While experts recognize the sport can be dangerous, the USPA has said most accidents occur as a result of human error, not equipment failure.
“Many of the accidents occur because the jumper—oftentimes an experienced skydiver who is pushing the limits— makes an error in judgment while landing a perfectly functioning parachute,” the USPA writes on its website, likening skydiving incidents to automobile accidents that “are not usually the result of equipment failure, but rather operator mistakes.”
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Falling behind on credit card payments can be a tough issue to deal with, but it becomes even more challenging when your debt is sent to collections. When that happens, the friendly reminders from your card issuer are replaced with persistent calls and letters from third-party collectors. This can be a stressful experience, but it’s important to remember that there are ways to regain control of the situation. Educating yourself about the process and your rights can help empower you to make informed decisions.
Credit card debt is considered “in collections” when your original creditor has either sold the debt to a collections agency or hired one to recover the unpaid balance. This usually happens after 90 to 180 days of missed payments. By this point, the creditor has decided that recovering the debt internally isn’t feasible and has turned it over to a third party to minimize their losses. While this escalation may feel like the end of the process, it’s actually a pivotal moment when you can take steps to address the problem.
If your credit card debt goes to collections, it’s critical to approach the situation with clarity and strategy. Knowing what to expect, understanding your rights and exploring your options can make a significant difference.
Learn how to get rid of your high-rate credit card debt today.
What to know if your credit card debt goes to collections
Below are three crucial things you need to know if your credit card debt goes to collections.
Ignoring the debt can have serious consequences
One of the worst things you can do when your credit card debt goes to collections is to ignore it. While it’s natural to want to avoid the stress, inaction can lead to significant consequences. If the collection agency cannot reach an agreement with you, they may sue you for the unpaid debt. If they win the lawsuit, they could obtain a judgment against you, which might lead to wage garnishment, bank account levies or liens on your property.
Ignoring the debt can also hurt your credit score. A collections account on your credit report can remain for up to seven years from the date of the first missed payment, significantly impacting your ability to obtain credit in the future. While paying off the debt won’t remove the account from your report, it will show it as “paid,” which is viewed more favorably by lenders. Taking steps to address the debt, even if it’s just a small payment plan, can help mitigate the long-term damage to your financial health.
Find out how working with a debt relief company could benefit you now.
You have legal rights
The Fair Debt Collection Practices Act (FDCPA) is a federal law designed to protect consumers from abusive, unfair or deceptive practices by debt collectors. Understanding your rights under this law is essential when dealing with collection agencies. For example, debt collectors are prohibited from calling you before 8 a.m. or after 9 p.m., using threatening language or contacting you at work if you’ve told them not to. Additionally, they are required to provide written validation of the debt within five days of contacting you.
If a debt collector violates your rights, you have the power to report them to the Consumer Financial Protection Bureau (CFPB) or your state’s attorney general’s office. Familiarizing yourself with these protections can prevent collectors from taking advantage of you and ensure that you’re treated fairly throughout the process. It’s also a good idea to document all communications with the debt collector, including the date, time and content of each interaction, as this can be useful if you need to dispute their actions.
You can negotiate with collectors
When your debt goes to collections, it doesn’t mean you’ve lost all control. In fact, collection agencies often buy debt for a fraction of its original value, which means they may be willing to accept less than the full amount owed. This opens the door for negotiation. Depending on your financial situation, you might be able to settle the debt for a lump sum payment that is less than the total amount owed or negotiate a payment plan that works for your budget.
Negotiating with your creditors can be done on your own or with the help of a debt relief company that specializes in working with creditors to reduce your balance. Many people opt for the latter, as working with a debt relief company means getting access to experts who are experienced in these types of negotiations, which is a large part of why, on average, working with a debt relief agency can result in paying 30% to 50% less than your initial balance.
Before engaging in negotiations, though, it’s important to assess your finances and determine what you can realistically afford to pay. You should also be sure to get any agreement in writing before making a payment, as this ensures the collector honors the terms.
The bottom line
Dealing with credit card debt in collections can be a daunting experience, but knowledge is your best ally. By understanding your rights, being proactive about negotiations and avoiding the temptation to ignore the situation, you can take control and work toward resolving the debt. While it may take time and effort, each step you take brings you closer to financial stability. Remember, this may be a challenging chapter, but it doesn’t define your financial future. With determination and the right approach, you can navigate this situation and rebuild your financial foundation.